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 / Summer 2012 / Issue 67(originally published by Booz & Company)


CEO Succession 2011: The New CEO’s First Year

Every CEO, for instance, will likely feel the need to learn on the job during that first year. Schwan found himself in that position when he became CEO of Roche. “I knew the organization, of course, and I was a member of the corporate executive committee, so I knew my peers, and I knew the board,” he says. But he had been working for the company’s diagnostics business, and felt he had much to catch up on regarding the latest science under way in the company’s pharmaceutical efforts. So he made a conscious decision to go deeper into drug R&D. “I was looking for somebody who could literally teach me, and I found a very senior pharmaceutical executive whom I knew from the past, and who had retired in the meantime. He had enormous expertise in the area, but he was also known to be able to explain things in straightforward terms. I contacted him and he was very helpful — even excited to help me.”

7. Manage your time and your life with care. It should go without saying that the demands on CEOs are enormous, in terms of both time and pressure — perhaps especially early on in their tenure, when those demands are also unfamiliar. Every moment is important, and CEOs get little or no rest from the intensity. “You go from one very important decision to another,” says BT’s Livingston. “You might be with a senior government minister and go straight to a major customer, then straight to talking to 500 senior managers. Folks will say, ‘Well, this is a really important meeting’ or ‘a really important thing.’ It’s just consistent intensity as opposed to any individual event.”

The effort to balance one’s work and home lives can be overwhelming, many of the CEOs we spoke to noted, and getting it right is vital to success in the first year.

“I think the stability, the support from home, makes a huge difference” for the new CEO, says BT’s Livingston. “What you can’t do is to divide your attention between the two at once. I know executives who go home every other weekend or something, and it can be very hard. If you don’t have a very stable, very supportive home life, it can become too much pressure to take.”

Roche’s Schwan believes that the pressure can get so intense that it can affect one’s health. “If you are not conscious about traveling, keeping these pockets for your family, switching off in a conscious way, you’ll get exhausted,” he says. “If you’re always working against your own biorhythms, you’ll get health issues. It happens all the time.” That’s why Schwan says he tries his best to keep his weekends free. “You have to keep a certain distance from your job. It’s not easy to switch off over the weekend. I know people who can go to bed and forget about the job and sleep extremely well. I wish I could always say that.”

The first year on the job will always be a tough one for CEOs. They must deal with a new and different set of stakeholders — the board, new direct reports, heads of potentially unfamiliar business units, potentially a new and unfamiliar chairman, and the shareholders and customers, too. And their responsibilities are now immense — to fix whatever might be broken, to reset corporate strategy, and to serve as the company’s public face.

For all those reasons, the first year is critical, and getting it right is key to the success of the rest of the CEO’s tenure. It is a brief window of opportunity during which the CEO must put his or her personal stamp on the company, and set it on course to navigate an uncertain future. Ahmad Abdulkarim Julfar, Group CEO of Etisalat, an Abu Dhabi–based telecom operator, puts it succinctly: “Whenever new CEOs see any kind of opportunity, they should jump on it immediately. Opportunities have expiration dates.”

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  1. Ken Favaro, Per-Ola Karlsson, and Gary L. Neilson, “The Four Types of CEOs,” s+b, Summer 2011: Last year’s study suggested that the nature of the CEO’s job varies with the role of the corporate core — and that the more involved headquarters is in operational decision making in any given company, the more fragile the CEO’s tenure is likely to be.
  2. Ken Favaro, Per-Ola Karlsson, Jon Katzenbach, and Gary L. Neilson, “Lessons from the Trenches for New CEOs: Separating Myths from Game Changers,” Booz & Company white paper, January 2010: The practices that will substantially contribute to success for new CEOs.
  3. Ken Favaro, Per-Ola Karlsson, and Gary L. Neilson, “CEO Succession 2000–2009: A Decade of Convergence and Compression,” s+b, Summer 2010: This study documented a decade’s worth of CEO succession trends and noted how governance norms are converging and the job of the CEO is compressing, in terms of both tenure and capacity.
  4. Gary L. Neilson and Julie Wulf, “How Many Direct Reports?Harvard Business Review, April 2012: An author of this article and a Harvard Business School professor discuss why the CEO’s average span of control, measured by the number of direct reports, has doubled, rising from about five in the mid-1980s to almost 10 in the mid-2000s.
  5. For more thought leadership on this topic, see the s+b website at: and the Booz & Company website at:
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